Judge shoots down Trump’s homeless funding shift: ‘The hallmark of unreasoned decision making’

California scored another win against the Trump administration in their battle over how to address the homelessness crisis here and nationwide.

A federal judge this week shot down the federal Department of Housing and Urban Development’s 2025 attempt to divert money away from permanent housing and instead fund temporary shelters and programs that require sobriety. But the judge stopped short of banning the Trump administration from making such changes in the future.

“The federal court’s decision to reject the Trump-Vance Administration’s attempt to disrupt essential housing services for people experiencing homelessness, including families, seniors, veterans, and people with disabilities, is both appropriate and just,” Renee Willis, chief executive of the National Low Income Housing Coalition, wrote in a news release.

In November, the Department of Housing and Urban Development said jurisdictions applying for about $4 billion in federal Continuum of Care funding can’t spend more than 30% of it on permanent housing — a move that would result in a significant cut to the type of long-term housing that for years has been a cornerstone of the fight against homelessness.

Last year, California communities spent about 90% their share of that money on permanent housing.

A group of states, including California quickly sued. San Francisco, Santa Clara County and a group of national homelessness nonprofits filed a separate lawsuit. In December, a federal judge in Rhode Island temporarily blocked the changes. In February, Congress ordered HUD to renew grants from 2025 under the old rules.

This week, U.S. District Judge Mary McElroy partially granted the plaintiffs’ request for summary judgement in both cases. She ruled that the federal agency did not try to foresee the harm its “breakneck” transition away from the country’s longstanding “housing first” model – which prioritizes getting people into housing without first forcing them to seek treatment – would have on the country’s homeless individuals.

“Overall, the actions undertaken by HUD in attempting to hastily eliminate its housing first approach serve as the hallmark of unreasoned decision making,” McElroy wrote.

HUD did not immediately respond to a request for comment.

The ruling wraps up both cases, unless the Trump administration decides to appeal.

But the fight isn’t over. The Trump administration tried again last month, moving to shift 2026 federal funding away from permanent housing and the housing first framework. Housing advocates tried to challenge that latest shift in the prior lawsuit. The judge rejected that attempt, but welcomed the plaintiffs to file a new lawsuit.

The housing advocates said they are weighing their next steps.